business structure

My son David has been researching a new idea that he presented this past weekend to a gentleman who has made tens of millions of dollars developing Internet companies and then selling them. This is one David did all on his own. And, at the first meeting, he convinced the gentleman to partner with David on this new project.

So, now my son is asking me the questions that a lot of people ask when they start a business and need a business structure fast. What is the best business structure? What state should we incorporate in?

Today I quoted someone on setting up a New York entity. It’s not the first time I’ve worked in NY, but it is the first time I’ve had to quote on publishing costs within New York County. And all I’ve got to say is “ouch!”

There are good ways to start a business, and there are some not-so-good ways to start a business. The more you know, the better chance you have to make a good start.

In this new Online Workshop, I’m talking about 3 important steps you must take to start your business off on the right foot!

Since I changed my program to do reviews of tax returns up front for free, I’ve seen a lot of different strategies (or lack thereof).

I’ve been doing this a lot of years now. I think I might have been the first to come up with the term “Tax Strategist.” And while I wasn’t the first to talk about tax loopholes, I was the first person to get it trademarked and then registered. (Diane Kennedy’s Tax Loopholes® ) So, it’s interesting to go back and look at the differences in the plans I see come in now.

I get this question a lot from people looking to form LLCs, especially when there’s just a single owner, or only 1-2 owners. There are some neat things you can do with a manager-managed LLC … if you know the tricks!

As your business grows, sometimes the character of the income you earn changes. This is especially true if you are looking to make the move from actively working in your business to having it passively run by itself, without your daily involvement. But if you don’t keep an eye on your business tax status you could find yourself paying far more in taxes than you need to!

I came across this awhile ago - people taking title to real estate in the name of an S Corporation, and then trying to get around the “due on sale” clause at a later date by simply transferring the shares of the S Corporation to a new owner. It’s the same game as the Land Trust - where the property title stays static, while the property owners change behind the scenes.

But in this case, my first thought was “Why would you want to compromise your asset protection strategy?”

A business, hands down, is one of the best way to save on taxes. But, that doesn’t mean that you can simply declare “I have a business” and get thousands of newly found deductions.

First, you must prove that you have a business. You also need to prove that the deductions are ordinary and necessary to the production of income. And, finally, you need to be able to prove that you paid for the expense.

When Does Your Hobby Become a Business?

Several years ago, when I was just learning the ropes of the U.S. asset protection system the idea of using Limited Partnerships for families was hot. People loved them for three major reasons:

(a) Absolute General Partner control was firmly established by caselaw
(b) Tax-saving advantages
(c) Easy transfer of assets to the next generation

There was also a massive marketing push towards getting people into “family” limited partnerships. But a lot of things have changed since then. Is an FLP still a good choice?

In my last post I talked about when it can be appropriate to have a single business structure wearing multiple hats. Today I want to talk about how the same applies to LLCs.

A typical new client call often begins with something like: “I’ve got seven homes, two owned outright, and more than 50% equity in each of the others. Can I put them all in one LLC?”